Indonesia Leaves Key Rates Steady, Lowers Reserve Requirement Ratio


The Bank Indonesia left its benchmark interest rate on hold at 7.50 percent on November 17th 2015 as widely expected but lowered the reserve requirement ratio by 50 bps to 7.5 percent. The lending facility and the deposit facility rate were also left unchanged at 8.0 percent and 5.5 percent respectively.

The lower reserve requirement ratio will be effective from December 1. The decision aims to increase bank lending capacity and boost weak growth amid lower inflation. Policymakers consider the macroeconomic stability is getting better so there is room for monetary policy easing. However, the central bank remains cautious on easing due to the high uncertainty in the global financial markets, especially with a possible US rate hike and the diversity of the monetary policies pursued by the European Central Bank, Japan, and China.

The central bank said he is confident inflation will stay at the lower limit of the target range of 4 ± 1 percent this year while the current account deficit is estimated to be around 2 percent of GDP.

Indonesia Leaves Key Rates Steady, Lowers Reserve Requirement Ratio


Joana Taborda | joana.taborda@tradingeconomics.com
11/17/2015 11:56:04 AM